Social-networking giant MySpace.com on Wednesday blocked Photobucket videos and photo slide shows from being uploaded to its pages.

MySpace will no longer let users post such content from Photobucket in their profiles, blogs or comments section. MySpace said Photobucket had violated MySpace's terms by encouraging users to post advertisements--specifically to an ad campaign for the upcoming feature film Spider-Man 3--in their videos. MySpace forbids third-party vendors from advertising on its site.

"We spoke to the company about their actions, but they refused to respect our community's terms," MySpace said in a statement. "We had no choice but to disable their service."

The move is something akin to Microsoft blocking third-party applications from Windows. Scores of companies offer software tools, commonly referred to as "widgets," that allow users to post photos, music, video and other content to Web sites, and many have built their businesses specifically around MySpace's 90 million users.

Photobucket is the largest photo-sharing site on the Web with more than 17 million monthly users, and has recently branched into videos. If MySpace is willing to risk alienating Photobucket's users, the question for many in the industry is who is next?

MySpace, which was acquired by Rupert Murdoch's News Corp. in July 2005, has gradually added restrictions that companies must adhere to if they want to do business with MySpace users, according to a report last month in The New York Times. In a March story by CNET News.com, industry observers predicted that Photobucket might be vulnerable to a decision by MySpace to block the company's tools.

"MySpace is contradicting the very belief of personal and social media," Photobucket said. "By severely restricting this freedom, MySpace is showing that it considers you as a commodity, which it can treat as it sees fit...Vote with your feet and your keyboards. Tell MySpace how you feel."

Photobucket disputes MySpace's version of events. The social-networking site never alerted Photobucket before pulling the plug on slide shows and video, according to Alex Welch, Photobucket's CEO.

Welch also said Photobucket executives aren't in some room biting their fingernails over the issue. MySpace may have helped spur Photobucket's growth but the photo site now serves photos and videos to 300,000 Web sites.

"We're not expecting to see a significant effect on our business from this," Welch said. "Only about 25 to 30 percent of our total registered users link to MySpace."

Welch declined to comment when asked whether Photobucket was considering removing the offending material. He said he hasn't heard from anyone at MySpace so he doesn't know for certain whether removing the Spider-Man ads would mean an end to the ban.

Sources close to MySpace point specifically to a Spider-Man 3 advertising campaign on Photobucket, in which members of the site were encouraged to use clips from the upcoming movie to make their own slide shows. This, according to MySpace, counts as a violation of the social-networking site's terms of service, which block unauthorized commercial advertising by members.

MySpace, meanwhile, has also been participating in promotional campaigns for the upcoming Spider-Man 3 movie from Columbia Pictures, which will be released on May 4. A Spider-Man 3 MySpace page highlights samples from the movie's soundtrack and boasts about 2,500 "friends" at last count.

Sources, however, stressed that the company's blocking of external advertising does not have anything to do with whether the company has its own advertising deals for the same brand. Potentially infringing content, they say, is dealt with on a case-by-case basis.

"If they do anything like this with pictures I will definitely go back to Facebook," read another post from "Alex Elhage." "The only good thing about MySpace was how much you can customize your page."

Photobucket isn't the first company for which MySpace has opted to block content. Last year, the social-networking site
banned content from video-sharing site Revver for similar reasons; as part of Revver's revenue-sharing model, advertisements are automatically inserted in its video clips. According to Angela Gyetvan, Revver's vice president of marketing and content, the company attempted to negotiate with MySpace and even give it a slice of the advertising revenue from Revver clips embedded in MySpace profiles.

"We approached them with the idea (of sharing revenue) because that's how our system is built," Gyetvan said in an interview. But MySpace declined the offer and continued with its decision to block Revver content. "It's their business. They get to make the decision about how they want to run it. But it does seem to be creating disaffection among certain communities right now."

Gyetvan claimed that even though Revver users were "fairly unhappy" by MySpace's decision, ultimately the content blocking didn't shake the video-sharing site too much; after all, video-sharing sites accomplish a lot of their business through corporate partnerships. "We have a lot of partners, from smaller media entities to great big media entities, that are approaching us for the fact that we share our revenue for syndicating our content."

The team behind Stickam, a social network with a Webcam focus, was less forgiving than Revver when they learned that MySpace had banned their content, too.

"It's MySpace flexing their muscle a bit in terms of denying companies that have products that are add-ons and are using MySpace's size to grow their own size," said Scott Flacks, Stickam's vice president of marketing and operations. "My concern about that has been their selectiveness in terms of who they've been banning," he added.

Flacks noted that MySpace had banned video-sharing giant YouTube only to revoke that ban soon after.

"(That MySpace is) selective in not allowing other companies to use it is disheartening, and the lack of dialogue with a lot of these companies is also disheartening," Flacks said.

But for a site like Photobucket, which relies largely on individual users who do not pay for their accounts, the story could be very different.

MySpace has also blocked content from third-party sites for other reasons. Imeem, a social-networking site centered on the sharing of media like videos and audio files, also has had its popular MySpace widgets blocked. The reason behind this, however, was not advertising but rather the presence of copyrighted content in Imeem widgets, according to sources close to MySpace.

You dont have to leave myspace ... if you dont give out personal info... you kno how to be cautions and i am tired of hearing stories about people gettin raped when it is not myspaces fault but those peoples... .. they gave out their addresss...their #.. and their full name... if you think myspace is bad then you caint have yahooo either.. beat that!

1) MySpace irrationally and intentionally risked alienating thousands of users by blocking Photobucket without any discussions.

2) MySpace discussed Photobucket's violation of their TOS with them (knowing it was in their best interest to work out an agreement) and Photobucket decided to instead bully MySpace into capitulating by refusing and publicly slandering them.

I use EngageMe.com to create my interests profile and then export it to my Myspace page. Is this next? This 'plugin' seems very non-obtrusive, a lot less so than photobucket. How do MySpace make their decisions? Because sooner or later what will I be able to place on my MySpace page? I won't have anything less, and it is not like MySpace has all the answers.

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